Article ID: | iaor201112336 |
Volume: | 34 |
Issue: | 2 |
Start Page Number: | 279 |
End Page Number: | 294 |
Publication Date: | Jun 2011 |
Journal: | Journal of Financial Research |
Authors: | Liu Yixin |
Keywords: | management |
I investigate the relation between founding family ownership and firm cash holdings. I find that cash holdings are significantly lower at family firms than nonfamily firms. I also examine the marginal value of cash and report a smaller value of cash for family firms. Combined, the findings are consistent with the spending hypothesis that family firms tend to deploy cash quickly and the market discounts the quality of their spending.